Struggling Alderney needs lift-off to survive

IT’S A quirk of Bailiwick life I suppose that extending a runway can be absolutely essential for boosting Alderney’s economy and giving our national airline a financial lift, while just 25 miles away the exact opposite holds true. Shoving a few extra yards on Guernsey’s airstrip so the world’s most popular jet, the Boeing 737, can land here would, we’re told, be a costly mistake and virtually guaranteed to kill off Aurigny.

The conundrum certainly seemed to throw the head of Economic Development, because Neil Inder decided to abstain in the £24m. vote to redevelop Alderney Airport, while his committee colleague, former hotelier Simon Vermeulen, didn’t vote at all.

How they’ll jump in next year’s debate on extending Guernsey’s runway remains to be seen but, for Alderney politicians and business leaders, the benefits are obvious. Improve connectivity, use larger aircraft and the economy will grow and investment pour in.

What didn’t get so much attention is the state of the island itself. Now don’t get me wrong. I’m a great fan of Alderney and love the place. But having just read the official statistics on how it’s doing I was shocked by the extent to which it’s living on borrowed time.

Go there and what strikes you is how lovely the island is and the tremendous sense of community and trust. Nick the taxi driver, for instance, never locks his back door. So when the sausages he was expecting to have for dinner one evening disappeared from the fridge he guessed his neighbour had run a bit short. Sure enough, the next day the empty space had been filled with a thank-you steak.

You can’t put a price on that and my too-infrequent trips there always remind me of the Guernsey we once had – and miss. What the statistics tell you, however, and sadly, is that this idyll cannot last much longer without significant change – something highlighted this week by former Treasury minister Lyndon Trott.

To explain why, you need to go back to the end of the war and remember that Alderney had ceased to be as a functioning community. German Occupation and the total civilian evacuation wiped it out. Following discussions with the UK after the war, Guernsey stepped in to assume financial and administrative responsibility for the basics like police, education, immigration, social services, health and the airport and roads and sewage.

It was supposed to be a temporary arrangement until Alderney got back onto its feet but, with some modifications over the years, is still effectively in place and last year it cost Guernsey taxpayers £18.4m. to provide these essential services. Under the arrangement, certain funds are received back from Alderney, mainly tax, so the net subsidy was £8.4m. Give or take, that’s the £5,000 per Alderney head Deputy Trott referred to in terms of Guernsey taxpayers keeping the island afloat.

It’s another quirk of the system that Alderney receives that level of support for the so-called transferred services at the same time as it made a surplus of £1.7m. on the services for which it is responsible. Since there’s no fiscal union – as there is with, say, St Sampson’s or the Forest – Alderney remains self-governing while benefiting from significant Guernsey subsidies AND has money of its own. A nice position to be in.

What other reports show is that the single biggest employment area in the island is the States – public administration mops up 20% of all available staff, with hostelry representing the second-biggest sector. The States, funded by Guernsey, is a far better payer, too – median earnings of £32,922 v. £18,624 for tourist-related work.

To put that into context, island-wide, Alderney median earnings were £27,220 at the end of last year – and that was after a 4.6% increase, the highest uplift for eight years. By contrast, median earnings in Guernsey were £36,326, around £760 a month more.

It’s the age profile of Alderney that gives the most concern, however. The population is pretty static at around 2,000 and little Ridunians are in short supply, with just 17 babies born last year. So Alderney is heavily dependent on immigration to keep numbers up.

The stats don’t make it particularly clear but I believe most heading there are older folk – 34% of people who immigrated to Alderney during the year to 31 March 2021 had previously been living in Guernsey – and so the only age groups actually increasing are the 65s to 84s (up 174) and 85 or over (up 46).

What this means, without going into the arcane details of dependency ratios and the like, is fewer than 40% of Alderney’s population is working to support the other 60% who are retired, and that situation is set to worsen. The consequences of that on tax take and cost of public services is unsustainable but masked by the multi-million pound annual subsidy from Guernsey.

Another oddity is that 32% of all property available for rent is owned by non-residents and that represents 15% of the total housing stock of 1,494 units – holiday island or what, eh?

Ignore the genuine loveliness of Alderney for a moment and what do all these figures actually mean? Statistically, the island is basically a retirement and/or holiday home funded by Guernsey taxpayers and entirely dependent on a 1948 agreement that was supposed to be short term only, with a rump of ‘proper’ community tacked on.

In figures – this is a bit rough but gives you the basic picture – Alderney consumes £21.5m. of services and support but raises around £13.2m. towards that. The balance comes from you and me.

Without more young people, more jobs and more growth, the imbalance is set to grow and the reliance of the elderly on those actually in work to fund retirement and healthcare will become much worse. To a large extent, this mirrors Guernsey’s situation. Its government also spends more than it takes in, hence the talk of GST. In addition, for every 100 workers here we have 57 dependants, whereas 10 years ago there were only 47. In Alderney, however, for every 100 workers there are now an astonishing 89 dependants.

I said earlier that this can’t go on. Well, clearly it could if Guernsey so wishes, but there are two things at play. Firstly, what’s meant by temporary support under the 1948 agreement and when, if at all, should Alderney honour the implied obligation to bring it to a close? Secondly, given Guernsey’s worsening financial position, when will politicians here start putting the screws on to save money or put that multi-million spend into Sarnian services?

In essence, the choice ultimately facing Alderney is whether it becomes a parish of Guernsey – Deputy Trott’s fiscal union – or elects for full economic independence and paddles its own canoe. All of which means its insistence that a better airport and runway guarantees economic growth should equal a win-win, because it would reduce the annual calls on the Guernsey exchequer and delay that crunch decision on the island’s future.

In short, getting your runway right is crucial for any small island community.